Euro holds up against US dollar

Tokyo (June 24) The euro held up against the dollar in Asia on Tuesday despite poor economic data for the 18-nation eurozone pointing to slowing growth.

The common currency bought $1.3594 in Tokyo afternoon trade against $1.3601 in New York Monday afternoon, although it slid to 138.49 yen from 138.65 yen.

The dollar fetched 101.91 yen against 101.94 yen.

The euro was almost flat after disappointing data on the bloc's business activity.

“The risk-on attitude remains fashionable on capital markets, driven mostly by perceptions of the main central banks' behaviour,” Credit Agricole said in a note that came amid a period of calm.

“Market participants remain convinced that 'as long as the music is playing, you've got to get up and dance'.”

Main central banks have been committed to low interest rates to stimulate economies.

The European Central Bank lowered all three of its key rates this month, with chief Mario Draghi saying policymakers would also be open to possible asset purchases similar to those undertaken in the United States and Japan.

Eurozone business activity slipped for the second month running in June, suggesting a modest recovery could be stalling, a closely watched survey showed on Monday.

Markit Economics said its Eurozone Composite Purchasing Managers Index, a leading indicator of overall economic activity, slipped to 52.8 points from 53.5 in May, its weakest level since December.

The data showed that growth remained robust in Germany, despite weakening slightly, but that the downturn deepened in France, the country increasingly generating the most worry in the currency bloc.

Daisuke Karakama, chief market economist at Mizuho Bank, said the euro was not plunging but would likely remain top-heavy against the dollar and yen this week.

“The ECB will likely make all-out efforts to stabilise the euro at a low level, using the market's expectation for additional easing,” Karakama said in a weekly note.

The dollar was mixed against other Asia-Pacific units.

It rose to Sg$1.2493 from Sg$1.2484 on Monday, to 11,997.50

Indonesian rupiah from 11,970.80 rupiah and to 43.85 Philippine pesos from 43.78 pesos.

It fell to 1,017.95 South Korean won from 1,018.20 won and to 60.11 Indian rupees from 60.18 rupees.

It changed hands at Tw$29.97 against Tw$29.98 while staying unchanged at 32.46 Thai baht.

The Australian dollar inched down to 94.24 US cents from 94.39

cents, while the Chinese yuan was trading at 16.33 yen against 16.37 yen.